Deck 31: Other Creditors Remedies and Suretyship

Question 1

An assignment for the benefit of creditors is an involuntary proceeding instituted generally by a bankruptcy court.

Answer 1

False

Question 2

A person who holds a lien is called a[n] ____.

A) Charger
B) Consenting agent
C) Lienholder
D) Agreement holder
E) Property acknowledgement holder

Answer 2

Lienholder

Question 3

Which of the following is true regarding recovery under a mechanic's lien?

A) Filing a lien automatically ensures that a contractor will receive some money.
B) Even if a contractor performs deficient work, a mechanic's lien may be enforced.
C) Federal law governs enforcement of mechanic's liens.
D) There is no requirement that a contractor give a debtor notice of a foreclosure.
E) Any excess funds from a sale to pay the lien go to the debtor.

Answer 3

Any excess funds from a sale to pay the lien go to the debtor.

Question 4

Attachment is the same thing as a writ of execution.

Question 5

Which of the following is false regarding the process of attachment?

A) A creditor typically seeks an attachment as a prejudgment remedy in a legal action.
B) The creditor must file a lawsuit prior to seeking an attachment.
C) After attachment is complete, the creditor holds the property until judgment.
D) The court may attach the debtor's personal or real property.
E) The court may attach the debtor's checking and savings accounts.

Question 6

A surety is secondarily liable to the creditor for a debtor's debt.

Question 7

A secured interest is a[n] ______ lien.

A) Consensual
B) Statutory
C) Judgment
D) Approved
E) Evaluated

Question 8

A composition agreement is a contract between creditors and a debtor in which the creditors agree to accept a lesser amount to satisfy the debts and discharge the rest of the debt.

Question 9

Which of the following is true regarding types of liens?

A) Types of liens include consensual, statutory, and judgment, but not approved or evaluated.
B) Types of liens include consensual and statutory, but not judgment, approved, or evaluated.
C) Types of liens include consensual and judgment, but not statutory, approved, or evaluated.
D) Types of liens include judgment, statutory, approved, and evaluated but not consensual.
E) Types of liens include consensual, statutory, judgment, approved, and evaluated.

Question 10

A[n] ______ lien is a lien that is created solely through statute, regardless of whether the debtor wishes the lien to be created.

A) Consensual
B) Statutory
C) Judgment
D) Approved
E) Evaluated

Question 11

An artisan's lien remains in effect regardless of whether the artisan retains the property.

Question 12

If proceeds of the sale of real property do not cover the debt, the mortgagee can seek a deficiency judgment.

Question 13

A mechanic's lien is created by ____.

A) Acknowledgement
B) Consent
C) Foreclosure
D) Mortgage
E) Statute

Question 14

At any time before the sale of real property subject to a mortgage, the debtor may recover the property by paying the debt along with additional costs and interest.

Question 15

Which of the following is true regarding wage garnishment?

A) Wage garnishment is governed only by state law.
B) Wage garnishment is governed only by federal law.
C) Wage garnishment is governed only by local ordinance.
D) Both federal and state laws govern wage garnishment.
E) Garnishment is governed by contractual provisions not by state law, federal law, or local ordinance.

Question 16

Which of the following was the result on appeal in the case nugget Bates County Redi-Mix Inc. v. Windler, in which a supplier of concrete sought a mechanic's lien for the cost of concrete although the concrete had to be removed and replaced based upon improper installation by a subcontractor unconnected with the plaintiff?

A) The concrete supplier lost because the concrete had to be replaced.
B) The concrete supplier was granted a mechanic's lien largely because it was not responsible for the improper installation.
C) The concrete supplier was granted a mechanic's lien for only 50% of the cost of the concrete.
D) The concrete supplier was granted a mechanic's lien for only 75% of the cost of the concrete.
E) The concrete supplier was granted a mechanic's lien for only 25% of the cost of the concrete.

Question 17

A suretyship and a guaranty are the same thing.

Question 18

Creating a mechanic's lien on property automatically ensures that the contractor who filed the lien will receive money.

Question 19

Both artisan's and mechanic's liens are super-priority liens.

Question 20

When a person hires a worker to make improvements on real property but is later unable to pay the worker, the worker can create a[n] ______ lien on the person's improved real property.

A) Mechanic's
B) Approved
C) Constructive
D) Improvement
E) Acknowledged

Question 21

Which of the following is true if a debtor engaged in fraud in order to convince a surety or guarantor to enter into a contract with a third party?

A) Because the third party is innocent, neither the surety nor the guarantor is released from liability.
B) The surety is released from liability, but the guarantor is not.
C) The guarantor is released from liability, but the surety is not.
D) Both the guarantor and the surety will likely be released from liability.
E) Both the guarantor and the surety will likely be released from liability on interest due on the contract, but not for the principle amount.

Question 22

Which of the following was the result in the Case Opener in which the plaintiffs claimed that a mortgage foreclosure was wrongful because the foreclosure proceedings did not reveal the true secured party who had purchased the plaintiffs' loan from the original lender?

A) That the foreclosure was wrongful because the proper secured party was not identified.
B) That the foreclosure was wrongful because the loan should never have been transferred in the first place.
C) That the defendant rightfully foreclosed because the plaintiffs were in default on the loan and had no right to know the identity of the true secured party.
D) That the defendant rightfully foreclosed because the party who instituted foreclosure proceedings had the right to service the loan.
E) That while the identity of the secured party should have been disclosed initially in foreclosure documents, the plaintiffs were not prejudiced by that omission; and the correct secured party could be substituted in the proceedings.

Question 23

Which of the following is an order that permits the creditor to recover property beyond foreclosed property?

A) A deficiency judgment
B) A remainder judgment
C) A total judgment
D) A composition judgment
E) A reverted judgment

Question 24

Which of the following was the result in Cooper Investments v. Conger, the case in the text in which guarantors of a note claimed that they were not liable because the terms of the note had been altered without their consent?

A) That the guarantors consented by implication and remained liable.
B) That the guarantors failed to file a financing statement evidencing their position and that they, therefore, retained liability.
C) That the alterations should discharge the guarantors from liability on the note.
D) That the alterations should discharge the guarantors, but only for 50% of the obligation on the note.
E) That the alterations were commercially reasonable and that, therefore, the guarantors remained liable.

Question 25

Which of the following was the result in Cameron v. Ewing, the case in the text involving whether monthly proceeds from a reverse mortgage were subject to garnishment?

A) The court ruled that the payments were not subject to garnishment because the payments did not constitute earned income.
B) The court ruled that the payments were not subject to garnishment because the defendant's estate was ultimately liable to repay the monies received to the extent repayment could be generated from sale of the property.
C) The court ruled that the payments were not subject to garnishment because it would be against public policy to find as such.
D) The court ruled that the payments were subject to garnishment because the payments constituted debts due the defendant.
E) The court ruled that the payments were subject to garnishment based on public policy and also that the claimant was entitled to the full amount of the monthly payments.

Question 26

Which of the following is a term for a lien that has priority over other types of liens?

A) An excess lien
B) A super-priority lien
C) A top lien
D) A novation lien
E) A priority lien

Question 27

Which of the following is a claim to property by implication of law rather than statute?

A) Broker's lien
B) Common law lien
C) Consummate lien
D) Possessory lien
E) Vendor's lien

Question 28

Which of the following is a judicial order authorizing a local law officer to seize and sell any of the debtor's real or personal nonexempt property?

A) A writ of execution
B) A writ of attachment
C) A writ of garnishment
D) A writ of foreclosure
E) A writ of mortgage

Question 29

What is the amount of the homestead exemption?

A) $100,000
B) $50,000
C) $25,000
D) $10,000
E) It varies from state to state

Question 30

Which of the following exemptions permits a debtor to retain all or a portion of the family home so that the family will retain some form of shelter?

A) Real estate
B) Real
C) Personal estate
D) Homestead
E) Shelter

Question 31

Which of the following was the result in In re Hydro-Action Inc., the bankruptcy case in the text involving whether a claimant was entitled to a lien upon a conveyor belt system that it installed?

A) The court found that a lien was foreclosed because the claimant did not qualify as a mechanic, artisan, or materialman.
B) The court found that a lien was foreclosed because the transaction did not involve the manufacturing or repairing of an "article" or "building" as required under applicable law.
C) The court found that a lien was foreclosed because the bankruptcy trustee had priority.
D) The court found that a lien was available because the claimant qualified as a materialman engaged in manufacturing an article for the debtor thereby satisfying applicable law.
E) The court found that a lien was available because under principles of equity, it would be unjust to deny the claimant a recovery.

Question 32

A[n] ______ is a judicial order authorizing a local law officer to seize and sell any of the debtor's nonexempt real or personal property within the court's geographic jurisdiction.

A) Writ of execution
B) Order of attachment
C) Decree of seizure
D) Decree of sale
E) Writ of discharge

Question 33

According to the text, which of the following are the classes typically exempt from seizure to satisfy a debt through a judicial lien?

A) (1) Household goods and (2) appliances
B) (1) Household goods and (2) appliances tools and instruments needed to carry on a trade
C) (1) Household goods, appliances, and furniture (usually up to a set value), (2) clothing, and (3) equity in a vehicle (usually up to a set value)
D) (1) Household goods, appliances, and furniture (usually up to a set value), (2) clothing, (3) equity in a vehicle (usually up to a set value), and (4) tools and instruments needed to carry on a trade
E) (1) Household goods, appliances, and furniture (usually up to a set value), (2) clothing, (3) equity in a vehicle (usually up to a set value), (4) tools and instruments needed to carry on a trade, and (5) cell phones (usually limited in number)

Question 34

When a creditor, through legal action, seizes a debtor's property to satisfy a debt, the creditor has a[n] ______ lien.

A) Judicial
B) Mechanic's
C) Artisan's
D) True
E) Contempt

Question 35

An artisan's lien is a claim on ______ property.

A) Real, personal, and movable
B) Personal and real, but not movable
C) Movable but not personal or real
D) Personal, but not movable or real
E) Movable and real, but not personal

Question 36

Which of the following is true regarding type of judicial liens?

A) Attachments, writ of execution, and garnishment are types of judicial liens.
B) Writ of execution and attachments are types of judicial liens, but garnishments are not.
C) Garnishments and writ of execution are types of judicial liens, but attachments are not.
D) Writ of execution are a type of judicial lien, but garnishments and attachments are not.
E) Attachments are a type of judicial lien, but garnishments and writ of execution are not.

Question 37

Which of the following was the result in Bend Tarp and Liner Inc., v. Bundy, the case in the text in which the plaintiff filed a lien and instituted foreclosure proceedings in connection with a dispute involving payment for a pond liner following the defendant's refusal to pay based on an alleged tear in the liner?

A) That the plaintiff installed a defective liner and was not entitled to foreclose.
B) That the plaintiff properly installed the liner and was entitled to foreclose.
C) That the plaintiff properly installed the liner but was not entitled to foreclose because a section of the wall of the pond collapsed and the liner did not serve the purpose for which it was requested.
D) That although the plaintiff had installed a defective liner, the plaintiff was entitled to foreclose because the defendant did not object to the lien within 10 days.
E) That although the plaintiff had installed a defective liner, the plaintiff was entitled to foreclose because the defendant did not object to the lien within 30 days.

Question 38

What does the Federal Consumer Credit Protection Act state regarding how much a debtor's wages may be garnished?

A) That a debtor must be able to keep the 75 percent of his or her weekly net income.
B) That a debtor must be able to keep 30 times the federal minimum wage.
C) That a debtor must be able to keep the greater of the following two options: 75 percent of his or her weekly net income or 30 times the federal minimum wage.
D) Nothing because the Federal Consumer Credit Protection Act does not address garnishment.
E) Nothing because there is no Federal Consumer Credit Protection Act.

Question 39

Which of the following is a court-ordered judgment permitting a local court officer, such as a sheriff, to seize a debtor's property before the entry of a final judgment in an underlying case?

A) Garnishment
B) Attachment
C) Contempt
D) Fixture
E) Law enforcement lien

Question 40

Which of the following is a claim on property either created by a sales contract or imposed by a court in the interest of fairness?

A) Equitable
B) Consummate
C) Possessory
D) Broker's
E) Common law

Question 41

"Bad Hair Day." Molly started a new hair salon and leased space for the salon from Peggy. Unfortunately, Molly's styling caused some problems for customers. One customer's hair turned green from her bleaching process, and she burned another customer with a curling iron. Not surprisingly, Molly had little business and was unable to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a court-ordered judgment permitting the sheriff to seize and sell Molly's equipment including her hair-dryers, pedicure chair, nail polish, and other items, but the judge refused her request. Peggy did, however, obtain an order allowing her to seize $3,000 held in Molly's bank account with which to partially satisfy the debt. Peggy also discovered that Molly had for her personal use a wide-screen television set worth approximately $1,000 which was being held by Harold, a television repairer for the costs of repair. Peggy asked him to turn over the television because her lien had priority, but Harold refused.

-Assuming no exemption applies, which of the following will most likely be the result of the dispute between Harold and Peggy regarding the television set?

A) Harold will win the dispute because he has rights to a super-priority lien, and he will be able to recover amounts to which he is due from the sale of the television before Peggy is entitled to any funds.
B) Peggy will win the dispute because a judicial lien is always enforced before any other type of lien, and she will be able to sell the television for amounts owed to her by Molly without sharing any of the funds with Harold.
C) Harold and Peggy will be required to sell the television and split the proceeds 50-50.
D) Harold and Peggy will be required to sell the television and split the proceeds based upon their percentage of debt.
E) Harold and Peggy will be required to sell the television with Harold, the holder of an artisan's lien, receiving only 25%, and Peggy receiving the rest.

Question 42

"Defective Windows." Selina hired a contractor, Rex, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Rex made a mess of the windows. While the windows were initially in good shape, Rex cracked some, scratched others, and did not get the windows properly fitted into their frames. Selina received a bill for the windows from Good Windows, but she refused to pay. Selina was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Rex, who refused responsibility for any problems, also filed a lien after Selina refused to pay him.



-Assuming the court follows the reasoning of Bates County Redi-Mix Inc. v. Windler discussed in the text, which of the following is the most likely result if Good Windows proceeds with attempting to obtain a lien?

A) Good Windows would likely prevail because it was not the fault of Good Windows that the windows were installed improperly.
B) Good Windows would likely lose because the windows are not working properly for Selina.
C) Good Windows would likely lose only because Rex is unwilling to cover the cost of proper installation, and Selina should not be charged for windows when she has no remedy against anyone.
D) Good Windows would likely lose unless Selina can establish that Good Windows notified her by certified mail that she would have to pay for the windows even if they were improperly installed.
E) Good Windows would likely be granted a lien for only 50% of the cost of the windows.

Question 43

"Rough Start." Debby, who just graduated from college, wanted to buy a new car. She, however, did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Debby. Debby's father cosigned with Debby on her loan at the bank. Debby also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, George, agreed in a signed writing with the bank that he would pay Debby's start-up loan for the real estate business if Debby did not do so. Unfortunately, Debby did not make any money in the real estate business. She went bankrupt as did George who had been acting as her receptionist.

-What is the effect, if any, of Debby's bankruptcy on the debt owed by her father?

A) Debby's father is liable for the debt as he was when he initially signed the loan agreement.
B) Debby's father is released in the same manner that Debby is released.
C) Debby's father is released only if the bank failed to take sufficient steps to sue Debby and require payment of the loan before she filed for bankruptcy.
D) Debby's father is released only if the bank failed to notify him of the bankruptcy in sufficient time to allow him to make a proper claim against Debby in bankruptcy court.
E) Debby's father is released only if Debby failed to give him sufficient notice of her plans to file bankruptcy.

Question 44

Which of the following is true if a guarantor's oral promise to pay a debt is not in writing?

A) The guarantor may raise the absence of writing defense.
B) The guarantor may raise the statute-of-frauds defense.
C) The guarantor may raise the consolidation defense.
D) The guarantor may raise the UCC defense if a sale of a good is involved; otherwise, no defenses are available to the debtor.
E) There are no defenses available because there is no legal requirement that a guarantor's oral promise be in writing.

Question 45

"Bad Hair Day." Molly started a new hair salon and leased space for the salon from Peggy. Unfortunately, Molly's styling caused some problems for customers. One customer's hair turned green from her bleaching process, and she burned another customer with a curling iron. Not surprisingly, Molly had little business and was unable to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a court-ordered judgment permitting the sheriff to seize and sell Molly's equipment including her hair-dryers, pedicure chair, nail polish, and other items, but the judge refused her request. Peggy did, however, obtain an order allowing her to seize $3,000 held in Molly's bank account with which to partially satisfy the debt. Peggy also discovered that Molly had for her personal use a wide-screen television set worth approximately $1,000 which was being held by Harold, a television repairer for the costs of repair. Peggy asked him to turn over the television because her lien had priority, but Harold refused.

-Which of the following is the term for what Peggy requested when she requested that the judge have law enforcement officers seize and sell Molly's equipment?

A) Order of compliance
B) Order of law
C) Writ of execution
D) Writ of garnishment
E) Writ of debt satisfaction

Question 46

If a surety or guarantor pays the debtor's obligation to the creditor, the surety or guarantor has a right to ______, which means that the surety or guarantor is entitled to all the rights that the creditor had against the debtor.

A) Subrogation
B) Reimbursement
C) Contribution
D) Recoupment
E) Securement

Question 47

"Rough Start." Debby, who just graduated from college, wanted to buy a new car. She, however, did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Debby. Debby's father cosigned with Debby on her loan at the bank. Debby also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, George, agreed in a signed writing with the bank that he would pay Debby's start-up loan for the real estate business if Debby did not do so. Unfortunately, Debby did not make any money in the real estate business. She went bankrupt as did George who had been acting as her receptionist.

-What is the effect, if any, of Debby's bankruptcy on any debt owed by George?

A) George is not released and will be liable for the loan amounts.
B) George is released in the same manner that Debby is released.
C) George is released only if the bank failed to take sufficient steps to sue Debby and require payment of the loan before she filed for bankruptcy.
D) George is released only if the bank failed to notify him of the bankruptcy in sufficient time to allow him to make a proper claim against Debby in bankruptcy court.
E) George is released only if Debby failed to give him sufficient notice of her plans to file bankruptcy.

Question 48

Which of the following may occur when a third party agrees to be liable for a debtor's loan either primarily or secondarily?

A) A suretyship, a guaranty, or a certified agreement
B) A certified agreement or a suretyship, but not a guarantee
C) A certified agreement or a guaranty, but not a suretyship
D) A guarantee but not a certified agreement or a suretyship
E) Either a suretyship or a guaranty, but not a certified agreement

Question 49

"Defective Windows." Selina hired a contractor, Rex, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Rex made a mess of the windows. While the windows were initially in good shape, Rex cracked some, scratched others, and did not get the windows properly fitted into their frames. Selina received a bill for the windows from Good Windows, but she refused to pay. Selina was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Rex, who refused responsibility for any problems, also filed a lien after Selina refused to pay him.



-Which of the following is the most likely result if Rex proceeds with attempting to obtain and enforce a lien?

A) Rex will lose because he performed deficient work.
B) Rex will lose unless he already paid Good Windows for the windows, in which case he would win.
C) Rex will win unless Selina has a writing signed by him in which he agrees that he will not seek a lien in the case of deficient work.
D) Rex will win if he proves that he had never had a problem installing windows before.
E) Rex will receive only half of his bill because he performed deficient work.

Question 50

"Rough Start." Debby, who just graduated from college, wanted to buy a new car. She, however, did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Debby. Debby's father cosigned with Debby on her loan at the bank. Debby also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, George, agreed in a signed writing with the bank that he would pay Debby's start-up loan for the real estate business if Debby did not do so. Unfortunately, Debby did not make any money in the real estate business. She went bankrupt as did George who had been acting as her receptionist.

-Which of the following is the correct term for the agreement entered into between Debby's father and the bank?

A) A suretyship
B) A guaranty
C) A certified agreement
D) An acknowledged agreement
E) An executory promise

Question 51

"Bad Hair Day." Molly started a new hair salon and leased space for the salon from Peggy. Unfortunately, Molly's styling caused some problems for customers. One customer's hair turned green from her bleaching process, and she burned another customer with a curling iron. Not surprisingly, Molly had little business and was unable to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a court-ordered judgment permitting the sheriff to seize and sell Molly's equipment including her hair-dryers, pedicure chair, nail polish, and other items, but the judge refused her request. Peggy did, however, obtain an order allowing her to seize $3,000 held in Molly's bank account with which to partially satisfy the debt. Peggy also discovered that Molly had for her personal use a wide-screen television set worth approximately $1,000 which was being held by Harold, a television repairer for the costs of repair. Peggy asked him to turn over the television because her lien had priority, but Harold refused.

-What is the most likely reason that the judge refused to allow the sheriff to seize Molly's equipment?

A) It would have been worth more than that owed to Peggy.
B) It was not listed as assets in the original complaint filed with the court.
C) It was exempt as tools and instruments needed to carry on a trade.
D) Peggy had a duty to exhaust all other avenues of recovery before seizing those items.
E) She incorrectly asked the sheriff to involve law enforcement and should have seized the goods herself.

Question 52

Which of the following is a transfer or assignment by a debtor of title to property to a trustee or an assignee who sells the property with the proceeds of the sale going to pay creditors on a pro rata basis?

A) An assignment for the benefit of creditors
B) A composition agreement
C) A sale and transfer agreement
D) A pro rata agreement
E) A termination agreement

Question 53

"Defective Windows." Selina hired a contractor, Rex, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Rex made a mess of the windows. While the windows were initially in good shape, Rex cracked some, scratched others, and did not get the windows properly fitted into their frames. Selina received a bill for the windows from Good Windows, but she refused to pay. Selina was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Rex, who refused responsibility for any problems, also filed a lien after Selina refused to pay him.



-Which of the following is the type of lien that Rex would likely seek?

A) Artisan's
B) Mechanic's
C) Removal
D) Construction
E) Judicial

Question 54

A ______ is a contract between a creditor and a third party who agrees to pay another person's debt and is primarily liable for the debt whereas in a ______, a third party, must pay a debt only after the debtor has defaulted.

A) Suretyship; guaranty
B) Guaranty; certified agreement
C) Certified agreement; suretyship
D) Certified agreement; guaranty
E) Guaranty; suretyship

Question 55

"Bad Hair Day." Molly started a new hair salon and leased space for the salon from Peggy. Unfortunately, Molly's styling caused some problems for customers. One customer's hair turned green from her bleaching process, and she burned another customer with a curling iron. Not surprisingly, Molly had little business and was unable to pay her lease payments as they came due. Peggy filed a lawsuit against Molly and obtained a judgment against Molly for $7,000 in past due rent. Peggy asked for a court-ordered judgment permitting the sheriff to seize and sell Molly's equipment including her hair-dryers, pedicure chair, nail polish, and other items, but the judge refused her request. Peggy did, however, obtain an order allowing her to seize $3,000 held in Molly's bank account with which to partially satisfy the debt. Peggy also discovered that Molly had for her personal use a wide-screen television set worth approximately $1,000 which was being held by Harold, a television repairer for the costs of repair. Peggy asked him to turn over the television because her lien had priority, but Harold refused.

-What type of order allowed Peggy to seize money from Molly's bank account?

A) Attachment
B) Garnishment
C) Relinquishment
D) Foreclosure
E) Consolidation

Question 56

"Rough Start." Debby, who just graduated from college, wanted to buy a new car. She, however, did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Debby. Debby's father cosigned with Debby on her loan at the bank. Debby also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, George, agreed in a signed writing with the bank that he would pay Debby's start-up loan for the real estate business if Debby did not do so. Unfortunately, Debby did not make any money in the real estate business. She went bankrupt as did George who had been acting as her receptionist.

-What is the effect of George's bankruptcy, if any, on the debt owed by George?

A) George may assert his bankruptcy as a defense against paying the debt.
B) George cannot bankrupt the debt because it is a suretyship agreement.
C) George cannot bankrupt the debt because it is a guaranty agreement.
D) George may only assert the bankruptcy as a defense if he filed for bankruptcy based on excessive medical bills.
E) George may only assert the bankruptcy as a defense only if he filed for bankruptcy protection within one year of agreeing to liability on Debby's loan.

Question 57

Which of the following is the lien of a judgment that arises when a motion for a new trial has been denied?

A) Attorney's lien
B) Common law lien
C) Consummate lien
D) Possessory lien
E) Denial lien

Question 58

"Rough Start." Debby, who just graduated from college, wanted to buy a new car. She, however, did not have much of a credit history, and the bank would not give her a loan unless she had a cosigner who agreed to be liable on the loan along with Debby. Debby's father cosigned with Debby on her loan at the bank. Debby also wanted to start a real estate business. She needed funds with which to do so. Her boyfriend, George, agreed in a signed writing with the bank that he would pay Debby's start-up loan for the real estate business if Debby did not do so. Unfortunately, Debby did not make any money in the real estate business. She went bankrupt as did George who had been acting as her receptionist.

-Which of the following is the correct term for the agreement entered into between George and the bank?

A) A suretyship
B) A guaranty
C) A certified agreement
D) An acknowledged agreement
E) An executory promise

Question 59

Which of the following is a claim to property in which the lienholder has the right to be in possession of the property until the debt is paid?

A) Attorney's lien
B) Common law lien
C) Consummate lien
D) Possessory lien
E) Denial lien

Question 60

"Defective Windows." Selina hired a contractor, Rex, to put new windows in her home that she purchased herself from Good Windows. Unfortunately, Rex made a mess of the windows. While the windows were initially in good shape, Rex cracked some, scratched others, and did not get the windows properly fitted into their frames. Selina received a bill for the windows from Good Windows, but she refused to pay. Selina was told that Good Windows would file a lien, but she believed that there was no basis upon which a lien would be granted. Rex, who refused responsibility for any problems, also filed a lien after Selina refused to pay him.



-Assuming the court follows the reasoning of Bates County Redi-Mix Inc. v. Windler, which of the following is true regarding the type of lien, if any, that Good Windows is entitled to obtain prior to going to court?

A) Good Windows is entitled to a mechanic's lien.
B) Good Windows is entitled to an artisan's lien.
C) Good Windows is entitled to a removal lien.
D) Good Windows is entitled to a judicial lien.
E) Good Windows is not entitled to any lien.

Question 61

Discuss the rights of a surety and a guarantor including rights when multiple co-sureties or guarantors owe the debtor's obligation to a creditor.

Question 62

Mary owns a small business of washing cars. Due to severe dry weather, the price of water increased, she had to increase her prices, and many customers stopped coming. Mary had several creditors. She told them that she does not want to sell her property and that she would like to stay in business, but that she is considering bankruptcy unless her debts can be reduced. By what type of voluntary agreement would creditors receive only a percentage of the amount owed to them, what are the principles involving such an agreement, and why would a creditor consider such an agreement?

Question 63

How does a court go about determining whether a claimant holding a mechanic's lien or a secured party has priority to a good?

Question 64

What does the Federal Consumer Credit Protection Act state regarding the amount that may be garnished from a pay check?

Question 65

Discuss why a creditor would want to attach property as well as whether attachment is more often sought by secured or unsecured creditors and why.